Climate change is having an increasingly detrimental effect on people’s lives and finances. In San Francisco, Kristy Jiayi Xu experienced this firsthand when the roof of her garage started leaking during a severe rainstorm. The delays in getting a contractor to fix the roof and the unexpected costs to keep things dry, such as a dehumidifier, have had a significant impact on her finances.
Insurance companies have the chance – and some might say obligation – to fight the consequences of climate change by utilizing their knowledge through different projects to create products that protect against risk for their customers. Allianz has reported that insurance companies are using their adroitness at risk management to help communities and governments develop plans to adapt to the effects of climate change, advocate for policymaking that promotes sustainability and provide financial and other incentives for individuals and businesses to adopt environmentally-friendly practices.
Insurance regulators are also beginning to take a more active role in tackling climate risk. The Task Force on Climate-Related Financial Disclosures 2022 Status Report has highlighted the key regulatory developments relating to managing the financial risks of climate change. They are helping to create a safer world in the eye of a growing storm by ensuring that insurers have thorough and diligent risk assessment in place that goes hand in hand with mitigation actions.
It is clear that climate change is having a major impact on the way insurers do business. Spencer Tierney, a writer at NerdWallet, encourages individuals to stay informed about the risks of climate change and take steps to protect their finances.
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1. “Regulatory Developments Related to Managing the Financial Risks of Climate Change” Commercial Observer, 15 Feb. 2023, https://commercialobserver.com/2023/02/regulatory-developments-related-to-managing-the-financial-risks-of-climate-change
2. “When Mother Nature Strikes; Working Together to Mitigate Natural Catastrophe Risk: AM Best Webinar” Insurance Journal, 20 Feb. 2023, https://www.insurancejournal.com/magazines/mag-features/2023/02/20/708130.htm
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